I have been a long time lurker, sometimes poster. I remember this forum a year ago when the conversation was on prep, awareness, concern. What I read now is about 90% crap, 10% useful. Why ? I think we are all scared. I know I am. The pollys are whistling through the graveyard. The doomers are seeking reassurance through like-minded folks. Gang, we have five and a half months. If you have prepared, give encouragement to those trying to prep. If you don't see any problem, go whistle someplace else. If my memory serves me correctly, this forum was designed to share information, offer help, and encouragement. Let's stop all the crap. If the outcome in January is good, bad or TEOTWAWKI, I for one will feel good about the things I have posted here. How about YOU ???????

-- reed moore (reed_moore@postmaster.co.uk), July 15, 1999

Answers

Accept death and everything will be fine. After that prepare for a month and if thats not enough the whole world is in deep shit! Life sucks and then we die.

I'v allways thought we should be as self sufficent as we can be in this world, so nows the time to be just that. Don't leteverything in your life be controled by the goverment and local services.

-- Rooster Cogburn (Gotitlate@wow.com), July 15, 1999.

Y2K is not my field of expertise,have read alot about it in the last 2 years,whatever the final outcome,it will be serious,because it will have occured at the wrong time.Asia 35% of world GDP is in a depression,South America and Europe are following very closely and the U.S. with its bubble.com mania about to explode will be humbled.Not to mention Russia on the brink of anarchy,china increasingly hostile sentiment towards U.S. does not bode well. My expertise is Wall Street,the following puts exactly what I feel in proper perspective.My friends consider me optimistic, conservative,and very objective.And know that I carefully study and research topics that interst me and rarely fly off the handle. The reason I describe myself,is that it is very difficult to assess peoples conclusions(forgive grammar and spelling I dislike Typing) with out knowing the source or their agenda.I am a parent and care dearly about my family and feel for others who tough decissions to make in the coming months,years.My advice to u is simple,be prepared for the worse case senario,first time in my lifetime where so many negative forces are gathering and the possible outcome can be very serious.If u can aford to get out of the city,DOIT,have water and food for at least one year minimum.Take nothing for granted,once TSHTF it will be too late everyone will be running in the same direction (fire in a theatre)The government had anoportunity last year and blew it.Should have advised everyone to slowly accumulate food and water,etc..ITS TOO LATE NOW.PREPARE .......................................................... The following says it all.Good Luck ................................................................. Forecast for 1999: The Gathering Storm

panic before Panic

The sudden volatility on world markets of September has given way to an eerie calm on Wall Street, and a return of crowd euphoria. With religious fervor, investors now believe in the power of the Federal Reserve to rescue the market from the very jaws of disaster. Looking beyond the moment, my forecast for 1999 is for the onset of severe recession, due to a combination of three fundamental destabilizing factors:

1. A worldwide credit-debt bubble of historic extremes, including an enormous bad debt burden. 2. Stock equity overvaluation, and 3. Effect of the Year 2000 computer bug (Y2K).

Factors 1 and 2 are the culmination of a decades-long global mania of wild speculation, reckless spending and borrowing, public and private. They contain no inherently accurate timing indicators for an end to the mania and economic collapse. It is well known, for example, that an absurdly high-priced stock can always become more outrageously overpriced, as long as one more fool remains alive to buy it. With the presence of factors 1 and 2 alone, the economy and market could in principle continue their advance for years to come. However, with Y2K, for the first and probably only time in history an indicator's future schedule is known to high precision. We may therefore consider Y2K as a trigger for the other two destabilizing factors, in the same way that a chemical explosive triggers the fission of plutonium in a nuclear bomb.

Japan officially admits a bad debt level of $1.2 trillion. Martin Weiss (martinweiss.com) now estimates the actual figure is $2 trillion, with an additional $1 trillion hidden in Japanese shell corporations' offshore accounts, the total equal to 60% of Japan's GDP. Total bad debt worldwide is estimated at $4 trillion, out of a total debt of $60 trillion.

Much has been said about Japan's debts; however this is a worldwide problem. A good way to measure its extent is to look at the ratio of total (public and private) debt to the GDP of a country. For the US, the total debt is now $21 trillion, with a GDP of $7.5 trillion, the ratio is at an all time high of 2.8. Just before the Great Depression of the 1930s, it was a mere 1.8. The historical average is around 1.0. Economists have now shown that the severity of a deflationary recession is directly related to the level of debt outstanding at its beginning. Crucial is the quality of the debt, a measure of the financial strength of borrowers. Today, debtor weakness is at an all time high. To illustrate this, commercial banks had 42 cents in reserve for every dollar of short term debt in 1929; today, only 14 cents on the dollar.

Derivatives are a new ingredient in the debt mix, only a couple of decades old. They are a gigantic "loose cannon" consisting of around $70 trillion worth of risky, highly leveraged investments similar to options, except they are not traded on exchanges, and are totally unregulated. They deal with everything conceivable, from junk bonds to real estate and futures on foreign currencies. A few large failures in derivatives would likely have a devastating result in the credit markets.

For years after the horrific experience of the1930s, most people shunned debt and credit as a moral leprosy. After World War II , this mindset could not withstand the enormous pent-up demand from two decades of deprivation. The mass-psychology flipped back from austerity to the easy ways of the 1920s. Credit is not only encouraged, but a status symbol in itself. A consumer's borrowing power has almost replaced income or monetary net worth as a measure of personal prestige. A blizzard of aggressively pitched credit card application forms arrive daily by post; the tube spills forth ads for debt consolidation, bankruptcy lawyers, home equity loans, payday advances. They promise deliverance unto bliss to the most unregenerate of habitual deadbeats, drowning out the heretofore ubiquitous automobile salesman.

Equity overvaluation: The world has now reached the final stages of the most powerful stock-market mania in history. Like the 17th century Dutch tulip bulb frenzy and the 18th century South Sea Bubble, it is about to blow its top. Here are four methods of measuring the valuation of the market:

1. Price / dividend yield: historical average = 23, reached 40 in 1929 before crash, is now 70. (a New York Fed study shows yields are low because stock prices are high, not because dividends are out of favor)

2. Price / peak earnings ratio: historical average = 12, was 22 in 1929, is now 30. (Peak earnings are calculated for the previous 5 years, to average out "noise" in earnings figures)

3. Price / book value, historical average = 1.6, is now 6.0.

4. Stock Prices / commodity prices : historical average = 6, is now 34.

According to these traditional valuation methods, the US stock market is presently overvalued by at least 100%.

And the market P/E ratio may be worse than advertised. The lead editorial in the Apr 12, '99 Barron's reveals a common corporate practice of leaving employee stock options off the books; not counting them as an expense. Warren Buffett asks, "If options aren't a form of compensation, what are they? If compensation isn't an expense, what is it? And if expenses shouldn't go into the calculation of earnings, where in the world should they go?" Taking stock options into account, British analyst Andrew Smithers figures the actual P/E ratio of the S&P 500 at the end of 1998 is 63, almost five times the historical average.

According to Nick Guarino of the Wall Street Underground, large mutual funds have borrowed huge sums against their stock holdings, for two purposes: to avoid the necessity of selling shares for redemption, and to manipulate market prices ever higher. Fund managers invest this money in high-leverage derivatives. He states:

"Many stock market mutual funds are, in essence, flat dead broke. If they had to liquidate to return investor's money, they would go under. Their massive derivative positions and borrowing, coupled with the biggest drop in cash flows in four years, means that liquidation will collapse the stock market and put them under water".

What lesson did investors absorb from the Crash of 1987? Rest assured it was not the correct one. Rather, they learned that today's New Era Economy can easily shrug off such an event as if it were the sniffles, that every correction will be followed by a roaring bull taking off for new highs.

The Negative-wealth Effect: When a stock market declines significantly, investors feel poorer, and reduce spending accordingly, from fear of unemployment, debt defaults, etc. This slows the economy, which in turn reacts back upon the market. This negative-feedback effect can snowball into a recession, given the presence of destabilizing factors of excessive debt, and overvalued equities.

During a bear market, from panic and from the negative-wealth feedback effect, the market usually plunges through the "proper valuation" like a pendulum, dropping to extremes on the low side, as it had reached extremes on the high side. Broker-brainwashed investors who "remained fully invested" were crushed by the declining market. From 1929 to 1932, the market lost 90% of its value in this way, and did not recover fully until the 1950s. Likewise, in the bear market of 1973-74 values dropped around 55%, and did not recover until 15 years later. Some of the "Nifty Fifty" stocks of that era, such as Polaroid, have still not recovered.

Dynamics of Bull and Bear Markets: During a bull market, economic and political events prove less serious than feared. The market reacts by rallying sharply, climbing the Wall of Worry as the anxiety dissipates. In a bear market, events prove more damaging than investors had expected. The market does not go down in a straight line. In the hopeful interludes, it rallies. When positive expectations are disappointed, the market drops to new lows, down what Robert Prechter calls the Slope of Hope. If rapidly cascading bad news works itself sufficiently into the collective unconscious, a crash can occur; as a mob stampedes for the exits after the cry of Fire.

Y2K is not a product of the fevered imagination of some Oliver Stone of finance. While the Last Trumpet will not sound and the sky will not roll up like a window shade, the bug will be a serious hit on the economy. Effects of Y2K can be divided into four categories: 1. Costs of remediation and purchase of new software, including bugs in the new software, 2. The effects of possible panic on banks and other financial institutions, caused mainly by uncertainty and stonewalling by government and business. 3. Litigation costs, and 4. The actual economic damage from malfunctions and shutdowns caused by the bug itself.

Effects 1, 2, and 3 are beginning now, and will increase steadily into 1999. Effect 4 will likely begin in late 1999. Result: failure of about 10% of US companies; a higher percentage overseas. (Martin Weiss). Ed Yardeni, chief economist at Deutsche Grenfell Bank, estimates Y2K alone would cause a recession equal to the 1973-74 oil embargo. Sources such as the World Bank, the US Senate y2k committee, the Gartner Group, Capers Jones and other private research firms support these conclusions.

The US and a few other countries are relatively ahead in the task of fixing the bug. The rest of the world, especially Asia, is lagging far behind, partly due to their obvious priority of dealing with their financial crisis. However, since companies' and agencies' Y2K-compliant computers must interact with other entities' non-compliant computers, the problem cannot be isolated; it is truly global.

The US individual savings rate, which has fluctuated between + 4% to +8% for many decades, has suddenly declined into negative territory in September '98, for the first time since 1933. Consumers feel confident, fortified by their stock wealth; they spend as if there is no tomorrow, ignoring the gathering storm. Brazil's currency has already de facto devalued by 30%. When this becomes obvious to the international speculators propping up the Brazilian economy, the last firewall protecting the US from the global deflation juggernaut will crumble.

Worldwide, fiat money and gold are locked in an epic battle for survival. To expand the credit-prosperity bubble without limit, central bankers must completely detach their currencies from gold, degrading it to a commodity like wheat or pork bellies. Reinforcing the present slump, according to gold analyst Larry Edelson, is one fundamental fact: that central bankers are running low on currency reserves, requiring them to sell their other assets, together with the analogous response of ordinary citizens of countries in Asia and elsewhere to the ongoing debt crisis: sell gold to raise emergency cash. Until the major fiat currency, the US dollar, collapses, this and the long term fiat plan keeps gold chained to its 20 year bear market. When the illusions come to grief and the dollar bubble bursts, the indestructible metal will arise from the ashes like the Phoenix. Edelson predicts a possible low of $180-200/oz in a classic bear-panic climax, damaging production and thus reducing supply levels, setting the stage for a gold renaissance, the price doubling "in a heartbeat"!

A few characteristics of historical investment manias: (Prechter):

1. A mania is born of a long-term, often-corrected bull market.

2. During the mania, the investing public begins to absorb the idea that the long term trend is always up, and begins to act as if the trend over any period is always up, ignoring the fact that after a high-powered bear market, getting back one's investment and "breaking even" typically requires several decades.

3. The mania itself produces a powerful, persistent rise with remarkably fewer, briefer, and/or smaller setbacks.

4. It involves broad participation by the public.

5. It ends in times of historic overvaluation by all traditional measures.

The oft-repeated New Era argument that new technological developments will continue to power the bull market onward and upward is unfortunately the identical one made in previous market manias of the '20s and the early '70s. Every extreme was thoroughly rationalized at the time of its creation. In spite of the most assiduous justification, high flying high-tech stocks always met their downfall, good and hard, in subsequent panics and corrections.

Will the Fed interest rate cuts stem the tide? During the early 30's, the Fed lowered rates eight times. The Dow got smashed. In the 90s, Japan lowered its rates to microscopic levels; the Nikkei is still headed south. Will today's "mixed economy", with government making up half the GDP, cushion the blow? Maybe, but government finances are in worse shape than advertised. The so-called budget surplus is sleight of hand. Many favorite New Class programs, e.g. the Department of Education and HUD, are kept off the books; the real deficit is $230 billion, and it will balloon to $500+ billion when the recession kicks in. Forgotten fatal errors of the 1930s reappear in force: trade protectionism, currency controls, and Keynesianism.

Since early 1998, a curious "hidden bear" phenomenon has affected the market. While a few dozen high flying big-cap stocks have kept the Dow and Nasdaq averages soaring, owners of thousands of other stocks have found themselves marooned in a parched desert of declining prices. Several theories have emerged to explain this. One is fear: mutual fund managers gravitate towards big-cap companies for their high liquidity, for easy exit during a market downturn. Another idea is simply that global deflation has begun to hit these smaller companies' earnings hard, and the price declines are merely a reflection of this.

What is the likely sequel to the hidden bear phenomenon? We can only observe the past. It has appeared before, twice in this century. 1929 and 1972.

At a distance the real New Paradigm wears a suit and tie. As he approaches we get a better view of the fellow; he has a big round furry face, button-shaped ears, beady eyes and teeth the size of railroad spikes.

The moral of this story? It takes the form of a small bit of advice: panic before the Panic.

G. A. Morrison July 19,1999

-- voice of reason (lfrank37@hotmail.com), July 15, 1999.

"The Big Bull Market" (1927, 1928, 1929)

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=000mbl

-- Linkmeister (link@librarian.edu), July 15, 1999.

Voice of reason: Thanks for your post. My reason for the inital post was to vent a little about the quality of information on this site. I really appreciate your views and consider them to be the kind of helpful information this board should be. By saying I'm scared, I mean not so much for myself and my family, but for all the people who have the resources to prepare and are too stupid to help themselves. When whatever comes down, they will be the first screaming for the government to help them when they should have helped themselves. The losers ? The poor folks who are just getting by day to day. They will have to compete with the "well to do's" who just didn't get it. May God have mercy on them. It's a crappy deal, it's not fair, I DON'T LIKE IT ! but, who ever said life is fair ? Got my rice, got my beans, got my water, but I AIN'T GONNA LIKE IT !!!

-- reed moore (reed_moore@postmaster.co.uk), July 15, 1999.

sounds like there,ll be alot of great Yard-sales.

-- alf (dogs@zianet.com), July 15, 1999.

reed moore: What are you hoping for....to save the apathetic from themselves? "stupid gets what stupid ignores". Please don't dump on any of us who have gotten past the "save the masses" BS.

This forum has ALWAYS had useful info and still does (now devided into TWO categories). This side happens to be a bit more rough and ready. John Q Public has had as much time to prepare as we have..... too darn bad for the clueless in *JULY 1999*. Thank William Jefferson Clinton for it and get off of the rest of our backs! (and watch YOURS, 'cause the Polly Queens have eggs hatching!)

-- Will continue (farming@home.com), July 16, 1999.

Will Continue,

I believe in saving myself.

Yes you have "been there and done that" stint, but I am serious.

You can try to save yourself, but unless you provinde the community around you a mechanism to survive without banging on your door you have done yourself a disservice!!!!!

So prepare a local pantry for the needy! Rather than be the pantry.

Just sounds better to me.

Father

-- Thomas G. Hale (hale.tg@att.net), July 16, 1999.

Please understand Father Hale, those were exactly our intentions. My husband was the Public Works Director for the town we lived in. We 'both' attempted to get the City Council and Mayor involved in preparations. I offered to form a 'community watch' with volunteers who would continue to look in on our senior citizens and those with children, illness and few resources. We contacted the local Methodist and Baptist ministers. We became the local joke in the grocery store and cafe. We both knew whose front porch the town would be on WTSHTF. We moved. I don't have to worry about the 'community' wanting my pantry and I won't have to watch their innocent children suffer as a result of their blatant stupidity. I won't be forced to hear their crying and witness their thrashing and expose MY children to their violence, pleading and panic.

"Stupid gets what stupid ignores". This isn't a tornado torn neighborhood we're talking about. People's live's destroyed without warning, in the middle of the night. They've heard. They've been warned. They HAD time. They have ignored. Survival of the fittest is becoming the logical term in *JULY 1999*. Save the masses should have been organized last year, when we were putting our reputations and careers on the line in an honest, sincere attempt to be of service.

-- Will continue (farming@home.com), July 16, 1999.

Thomas,

I think about 3/4 of the "needy" come 1/1/2000 will be those who had the means to prepare but did not. I have extra items stored to assist those around me, I know a few GI familes close to me that don't have the were-with-all to store the things they need. I have stored a few things for them, without telling them, because I want them to help themselves as much as possible and plan to let them know if things start to get bad. No, I'm not keeping it a secret just to be mean, I just don't want them to think they don't have to take some sort of responsibility and don't want to many folks knowing about my preps.

I will help these friends because I know them to be honest, moral, and hard working people. I do not plan on opening my door to folks, hard working or not, to the people who had the ability and funds to make preps but didn't because they didn't believe anything the saw, read or were told about the problem. Now, this in itself does not make the DGIs bad folks, it just means they had the same chance to prepare that I did, they just did not. They, I feel, are not my responsibilty. Those that wanted to but could not, well.....I will help as I can.

Remember, IF things go haywire, those who had a chance and did nothing will be the ones, IMHO, who will be leading the pack.

-- sigmund (got@beano.com), July 16, 1999.

G. A. Morrison July 19,1999

-- voice of reason (lfrank37@hotmail.com), July 15, 1999.

What? Way,way, to much to sort thru here. Thank you for the post but, I CANT HANDLE IT!! No shit, to much, to quick.

-- slow down__ (midwestmike_@hotmail.com), July 17, 1999.

Thanks for the post on the economic conditions.

Although we are gunning a bit too fast economically, value is based on perception. If everyone thinks Y2k will bring the next recession, then it will. herd mentality.

It may not be the disaster because of actual technical problems, but rather, a psychological one. Everybody borrows from everyone else in our current economic system. If the nation and world thinks that the stock market will do well, they will put their money in the market and it does well. If people think it's going to crash, they take money out and it crashes.

I think Y2k is more of a psychological problem than an actual technical one. The real problems will start if people panic and begin to take their money and run.

-- JAW (clueless@pollyanna.com), July 17, 1999.

JAW,

The lack of confidence you're concerned about might have been avoided if the widely made promise by the business community to finish remediation by December 1998 had been kept. Now it's July 1999, and, for example, the 21 largest cities in the country have fixed less than half of their mission-critical systems:

http://infoseek.go.com/Content?arn=a2636rontz- 19990715&qt=readiness&sv=IS&lk=noframes&col=NX&kt=A&ak=news1486

[snip]

The Senate panel displayed a chart showing that only 43 percent of the 21 cities' key systems were said by the cities themselves to be ready as of July for the date change.

[snip]

If investors do get nervous later this year, a major reason would be that not enough organizations began their Y2K projects soon enough. But, the public is calm right now, and optimists say the news about Y2K is quite good right now and getting better everyday. Let's hope there are no more missed deadlines.

-- Linkmeister (link@librarian.edu), July 17, 1999.